Combinatorial auctions with endowment effect

We study combinatorial auctions with bidders that exhibit an endowment effect. In most of the previous work on cognitive biases in algorithmic game theory focus was analyzing implications and mitigating their negative consequences. contrast, this paper we show how some cases can be harnessed to obtain better outcomes. Specifically, Walrasian equilibria markets. It is well known exist only limited settings, e.g., when all valuations are gross substitutes, but fail more general submodular. Our main result shows submodular, even a mild degree effect sufficient guarantee existence equilibria.